According to the latest insights from Grant Thornton’s International Business Report, sustainable initiatives were a key investment plank for Egyptian companies with international growth ambitions in Q2 2024. In fact, with some 29% of Egyptian business leaders expected to boost spending on sustainable development initiatives, the metric was the only one that showed an uptick compared to previous quarters.
The Egyptian Financial Regulatory Authority (FRA) has introduced mandatory ESG reporting regulations to align with international standards and promote sustainable development. The FRA has issued several decrees mandating ESG disclosures for companies listed on the Egyptian Stock Exchange (EGX) and those operating in non-banking financial sectors. The regulations aim to enhance transparency, attract international investment, and support Egypt’s commitment to UN Sustainable Development Goals (SDGs), which form the foundation of Egypt’s Sustainable Development Strategy: Egypt Vision 2030.
Considering the complexity and challenges associated with ESG reporting, the regulations are largely a series of yes or no questions that are intended to gather data on the current ESG corporate reporting landscape. Over the long term, the reporting requirements are expected to become more stringent in line with evolving global standards for ESG reporting.
Climate risks are increasingly having a real effect on companies and capital globally. ESG reporting is becoming not just a regulatory requirement but a strategic imperative. Investors, consumers, and shareholders increasingly demand transparency and accountability from businesses and are, as such, calling on global bodies to push for a common global standard for these types of disclosures.
In our market, companies are taking their first steps toward this global imperative to:
- Attract investments: ESG compliance is a critical factor when it comes to accessing capital from international investors. By adhering to global ESG standards, Egypt can attract more foreign direct investment (FDI), particularly from investors with responsible or sustainable development planks baked into their investment portfolios.
- Enhance competitiveness: ESG reporting positions Egyptian companies as leaders in sustainability, enhancing their competitiveness in the global market. It demonstrates a commitment to sustainable development, which is increasingly valued by consumers and partners worldwide.
- Mitigate risks: ESG disclosures help companies identify and mitigate risks related to environmental and social factors, ensuring long-term sustainability and resilience.
Recognizing the importance of consistently measurable ESG disclosures, Grant Thornton declared support for the IFRS Foundation in their push toward a common global standard for climate-related disclosures during Finance Day at COP28 held in Dubai in 2023. The move is part of the firm’s support for establishing market infrastructure to enable consistent, comparable climate-related disclosures at a global level, allowing member firms across the network to provide clear and consistent support to clients looking to bolster their ESG reporting.
Egypt’s commitment to ESG reporting is a significant step towards sustainable development and global integration. By aligning with international standards, Egypt not only enhances its investment attractiveness but also positions itself as a competitive player in the global market. For businesses, embracing ESG reporting is not just about compliance; it’s about driving innovation, building trust, and ensuring long-term success.
Reach out to SBA – Grant Thornton to help you navigate these regulations and achieve compliance, ensuring your business remains sustainable and attractive to investors.
